With EU elections just around the corner, Europe’s conservative populist parties announced a new alliance Monday with the goal of becoming the strongest faction in the European Parliament, while seeking to radically influence EU policies on security, migration, family values and the environment, according to Euro News.
From left, Olli Kotro, leader of The Finns Party, Jörg Meuthen, leader of Alternative For Germany party, Matteo Salvini, Italian deputy-Premier and leader of the League party, and Anders Vistisen, leader of the Danish People’s Party
“The news is that we are broadening the community, the family. We are working for a new European dream today. For many Europeans, the EU (European Union) is a nightmare,” Italian Deputy Prime Minister Matteo Salvini told reporters following a meeting of Europe’s far-right party leaders met in Milan on Monday. Salvini is spearheading the alliance, called “Towards a Europe of Common Sense,” which he says he hopes will “win and change Europe.”
Salvini was joined Monday by the far-right Alternative for Germany’s co-leader Joerg Meuthen, Olli Kotro of the euroskeptic populist party The Finns, and Anders Vistisen of the right-wing, populist Danish People’s Party. Those parties now come from other parliamentary groups, the European Conservatives and Reformists (ECR) and the Europe of Freedom and Direct Democracy (EFDD). –AP
The alliance hopes to form a majority bloc following the May 23-26 elections – “the most numerous, important, determined and forward-looking group,” according to Salvini.
“We are not aiming to lose or just participate. Our goal is to win and change the rules of Europe.”
Europe’s right-wing populist parties are currently divided into three groups: The Europe of Nations and Freedom (ENF) group — which includes Italy’s the League, France’s National Rally, Austria’s Freedom Party and the Netherlands’ Party for Freedom — the European Conservatives and Reformists (ECR), which groups the Danish People’s Party and the Finns Party among others, and the Europe of Freedom and Direct Democracy (EFDD), which has the Alternative for Germany (AfD) and the UK’s Brexit Party . –Euro News
The group’s top priorities are a halt to all clandestine migration, restoring political sovereignty to EU nations, protecting “European culture,” and stronger European borders – while the #1 threat to Europe is Islamic extremism.
“As interior minister for 10 months, the No. 1 risk in Italy and Europe is Islamic extremism, Islamic fanaticism, Islamic terrorism,” said Salvini. “There are extreme-right and extreme-left minorities in Italy and in Europe, (but) they fortunately are controlled and of limited numbers.”
Salvini rejected the notion that the groups are filled with political extremists bent on totalitarian rule.
“Today at this table there are no nostalgic extremists,” he said, adding: “The only nostalgics are in power in Brussels. Today, we look ahead with a clear memory of what happened in the past, but the tired debate of right, left, fascist, communist, is not what makes us passionate.”
Political experts say the May 23-26 European Parliament vote could prove to be a tipping point in post-war European politics, if traditional political powerhouses lose support and extremist, populist parties gain more clout.
The vote, which involves 705 seats this year, is run as national ballots in each of the bloc’s states. National political parties with common ideology then unite in EU-wide groups, like the center-right EPP, the center-left S&D Socialists or the liberal, pro-business ALDE.
The new euroskeptic alliance, launched under the banner “Toward a Europe of common sense,” expands on the parliament’s four-year-old Europe of Nations and Freedom Group (ENF), which already includes France’s far-right National Rally, Austria’s Freedom Party and the Netherland’s Party for Freedom. –AP
The alliance, which is holding a rally on May 18 in Milan’s central Piazza Duomo, says their invitation is open to all like-minded parties who wish to join the faction. If they win a majority in the EU elections, the group would cancel for good the process of inviting Turkey to become a member of the European Union – a process which has been stalled for years.
via ZeroHedge News http://bit.ly/2WT7834 Tyler Durden
As we discussed yesterday, whenever Assange is in the news and people are defending him you always see a bunch of hyper-emotional empire loyalists running around online trying to manage the narrative about him.
One of the most common talking points which comes up is that Assange is “not a journalist”.
The reason this talking point comes up, of course, is because the WikiLeaks founder is besieged by powerful forces who are attempting to imprison him for publishing inconvenient facts about them, and his defenders often voice their concerns about what this means for the future of press freedoms. The completely baseless claim that Assange is “not a journalist” is used in an attempt to defuse the argument that his prosecution by the US government could lead to the same fate for any news media outlet which publishes leaks on the US government anywhere in the world. If he’s not a journalist, then his prosecution sets no precedent for real journalists.
This argument, if you can call it that, is fallacious for a number of reasons. For starters, as The Intercept‘s Glenn Greenwald explained last year, there’s not any legal distinction in the US Constitution between news media outlets like the New York Times and an outlet which solely focuses on publishing leaks. If you set the precedent with any publisher, you’re necessarily setting it for all of them. Greenwald writes the following:
To begin with, the press freedom guarantee of the First Amendment isn’t confined to “legitimate news outlets” – whatever that might mean. The First Amendment isn’t available only to a certain class of people licensed as “journalists.” It protects not a privileged group of people called “professional journalists” but rather an activity: namely, using the press (which at the time of the First Amendment’s enactment meant the literal printing press) to inform the public about what the government was doing. Everyone is entitled to that constitutional protection equally: there is no cogent way to justify why the Guardian, ex-DOJ-officials-turned-bloggers, or Marcy Wheeler are free to publish classified information but Julian Assange and WikiLeaks are not.
Secondly, anyone with a functioning brain can see that Julian Assange is indeed a journalist. Publishing facts so that the citizenry can inform themselves about what’s going on in their world and what’s happening with their government is the thing that journalism is. Duh. The need for an informed citizenry is the entire reason why press freedoms are protected so explicitly under the US Constitution, and publishing facts about the most powerful institutions on earth indisputably does create a more informed citizenry.
You can look at any conventional dictionary definition of the word and come to the same conclusion.Merriam-Webster offers “the public press” and “the collection and editing of news for presentation through the media”. The Oxford English Dictionaryoffers “The activity or profession of writing for newspapers, magazines, or news websites or preparing news to be broadcast.” Your Dictionaryoffers” the work of finding, creating, editing and publishing news, or material written and presented for a newspaper, magazine or broadcast news source.” These are activities that WikiLeaks is undeniably involved in; they collect and publish newsworthy information to be circulated by themselves and other news sources. The fact that they do their part differently (and better) than other outlets doesn’t change that.
Which explains why the WikiLeaks team has racked up numerous awards for journalism over the years, including the Walkley Award for Most Outstanding Contribution to Journalism (2011), the Martha Gellhorn Prize for Journalism (2011), the International Piero Passetti Journalism Prize of the National Union of Italian Journalists (2011), the Jose Couso Press Freedom Award (2011), the Brazillian Press Association Human Rights Award (2013), and the Kazakstan Union of Journalists Top Prize (2014).
The claim that Assange is “not a journalist” is both an irrelevant red herring and a self-evident falsehood. It is made not by people with an interest in maintaining a small and specific linguistic understanding of what the word journalism means, but by people who want to see Julian Assange imprisoned by the same government which tortured Chelsea Manning because he made them feel emotionally upset. It’s a fact-free argument made entirely in bad faith for inexcusable motives: the desire to see a journalist imprisoned for telling the truth.
When someone says “Assange isn’t a journalist”, they aren’t telling you what Assange is. They’re showing you what they are.
* * *
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The amount of mental acrobatics that Wall Street analysts have to perform to justify continued buying of stocks even as bonds scream deflation, the yield curve screams contraction, Europe and China are already one foot in a recession, and earnings are set for their first profit contraction in 3 years, is simply staggering.
One week ago, we reported that in keeping with its now traditional “good quant, bad quant” strategy (profiled most recently here), just hours later, JPMorgan’s “other” quant, Nikolaos Panigirtzoglou published a report in which he said that while he maintains a risk-on and pro-cyclical stance (the alternative is risking being dubbed “fake news” by Kolanovic), he warned that “investors should start building up hedges against the risk of a repeat of the past two weeks’ yield curve inversion episode.”
Picking up on what he said two weeks ago, the JPMorgan strategist noted that “yield curve inversion has been generally a bad omen for growth and recession risk, though with variable lags to risky asset prices historically.” And while not news to those who read our latest recap of Panigirtzoglou recent report, at the macro level the “other” JPM quant warns that “despite the improvement in the Chinese and Asian PMIs in this week’s releases the global growth picture is not out of the woods yet” adding that “these cyclical risks are still manifesting in our global manufacturing PMI, which has failed to rise in the latest release despite better Asian PMIs”.
Then over the weekend, in order to dispel fears that stocks have levitated too high, one strategist came out with a “novel” interpretation, claiming that there is no reason to worry as, drumroll, equity investors have been worried about the wrong yield curve. That strategist: Mislav Matejka who works for JPMorgan, and is a co-worker of the far more skeptical Panigirtzoglou.
That’s right, one bank, two diametrically opposing takes on what the yield curve means for investors.
According to the “other” JPM strategist, while there’s concern that the recent inversion of the yield curve is a sell signal for the market, he notes there’s an average 18-month lag between such a move and the onset of a recession, Matejka said in a note to investors Monday.
His solution? Ignore the “bad omen” for stocks highlighted by JPMorgan’s Panigirtzoglou, and inatead please just look at the spread between the 10-year and 2-year Treasury yields – which is about 18 basis points away from inversion – instead of using the inverted 10-year and 3-month Treasury yield difference that has stock traders – and his own JPMorgan co-worker – on edge.
But while disagreements between different strategists at the same bank is hardly new, what is remarkable is what a third – and even more bullish – JPMorgan strategist told Barron’s to further stoke the bullish narrative.
In order to justify JPMorgan’s 3,000 price target in the S&P, in an interview with Barron‘s, the bank’s chief U.S. equity strategist Dubravko Lakos-Bujas said that while many strategists and investors try to predict the end of the business current cycle, he boldly claimed that it may be time to reconsider its very existence.
That’s right: with the US poised to enter its longest expansion on record in June (absent a recession in the next month or so, which looks unlikely except in retrospect) and with rising concerns that the economy is now extremely “late cycle”, JPMorgan’s solution is to ignore the business cycle entirely, as central banks have now effectively taken over micromanaging the global economy.
“We are all used to using the word ‘cycle’; we’re all used to looking at historical charts and graphs and equations and relationships,” Lakos-Bujas told Barron’s. “The reality is that maybe the word ‘cycle’ is no longer even relevant, given that we have so much unconventional central-bank involvement.”
Why does the JPM chief equity strategist feel comfortable with making such a ludicrous statement? It has everything to do with the lack of inflation (because on Wall Street, as well as in the Federal Reserve HQ, there is no such thing as surging housing, healthcare, education and food prices and all the focus is on deflating, and edible, iPads).
“The fact that we’re not seeing really significant inflation pressure—it remains positive but tame—suggests that there’s no reason for central-bank policy to rush,” he said, pitching central planning with the passion and fervor of a Communist Party undersecretary speaking in front of Leonid Brezhnev in 1968 Moscow.
Of course, as Barron’s noted, central banks have done more than just keep rates low: central banks have put their balance sheets to work like never before, with large-scale asset purchases injecting liquidity into economies around the world. The ECB has gone even further than the Fed, buying up both sovereign and corporate bonds. The Bank of Japan took it to yet another level, purchasing equities in addition to bonds; its balance sheet is now above 100% of Japan’s GDP.
“This is not a normal cycle just left to itself to run. It is continually fiddled with by these central-bank injections,” he says, as if that were a good thing. And apparently it is, because the positive spin on the entire world becoming a 1960s version of the USSR is that “rather than nearing the end of one decadelong cycle, perhaps it’s just the beginning of a fourth mini-cycle.”
The first cycle he identifies ran from 2009 to 2012, when the European debt crisis forced the ECB to be creative in its measures to support debt-burdened euro-zone economies. The next phase lasted until 2016, when some emerging markets slipped into recession and U.S. corporate profits declined for two quarters. It ended when the Fed paused interest-rate increases and other central banks turned more accommodative. Another mini-cycle ended in the fourth quarter of 2018, when the Fed pivoted to a dovish stance and China began fiscal stimulus.
That brings us to the start of 2019, when a fourth cycle might have begun. “We have these little mini-cycles that are continuously occurring, and they seem to coincide with central-bank policy,” Lakos-Bujas says.
Unlike his more bearish JPM colleague, Panagirtzoglou who has been skeptical for the better part of the past 4 months, Lakos-Bujas – just like Marko Kolanovic – sees the S&P 500 going to 3000 this year, as investors steadily become willing to take on more risk and overhangs like the U.S.-China trade dispute are resolved.
Perhaps there is something about Croatian genes predisposing analysts (Kolanovic, Matejka, Lakos-Bujas) to be especially bullish: we don’t know and it doesn’t really matter. But what struck us, is the lack of any critical observation or rational analysis of the dangers of central banks constantly stepping in to push stocks higher at any downside inflection points, something Bank of America pointed out over a year ago.
After all, in a world in which the economy is increasingly the market (where easy central banks and record buybacks are all that matter), all that is happening is that this increasingly artificial “market” is creating a world with record “zombie companies”, and staggering economic imbalances whose day of reckoning is not being resolved but merely delayed, guaranteeing that when the market finally does crack, not only will what little central bank credibility is left be crushed, but the world will fall into a depression the likes of which will make the 1920s and 1930s seems like a walk in the park.
via ZeroHedge News http://bit.ly/2Ki7zm8 Tyler Durden
That’s not uncommon behavior for prosecutors anywhere in the country, writes J.D. Tuccille. But what is notable here is that after surviving several attempts to hold him to account, Martinez’s luck may finally be running out. More details about allegations against him are coming out as the latest formal complaint against him goes to the Arizona Supreme Court.
This spring has seen a spike in families fleeing Central America and flocking to the U.S. border seeking asylum. Contrary to President Donald Trump’s claims, this isn’t a crisis. But the situation is straining the resources of frontline border agencies that are running out of space to process and house these migrants, partly because the president has been wasting resources on a useless wall rather than hiring judges and personnel for quick processsing.
Further, Trump’s proposed solutions will be too costly or unworkable or both.
There is, however, a costless fix: Hand these migrants a work permit right off the bat, but with a condition. Reason Foundation Senior Analyst Shikha Dalmia explains.
John Solomon published another blockbuster investigation Sunday on possible alleged interference in the 2016 election involving Ukraine.
Ukrainian sources told Solomon that the Trump Justice Department has allegedly not followed up on evidence given to the department by Ukrainian law enforcement officials.
Those Ukrainian officials said they have evidence showing that American Democrats, along with allies in Kiev, sought to interfere in the 2016 U.S. elections and obstruct ongoing criminal probes.
Solomon interviewed Kostiantyn Kulyk, deputy head of the Prosecutor General’s International Legal Cooperation Department. He told The Hill that he, along with other senior law enforcement officials, have tried since last year to get visas from the U.S. Embassy “in Kiev to deliver their evidence to Washington.”
Kulyk told Solomon, “we were supposed to share this information during a working trip to the United States. However, the (U.S.) ambassador blocked us from obtaining a visa. She didn’t explicitly deny our visa, but also didn’t give it to us.”
According to Solomon’s interview with Kulyk,
Ukrainian businessmen “authorized payments for lobbying efforts directed at the U.S. government. In addition, these payments were made from funds that were acquired during the money-laundering operation. We have information that a U.S. company was involved in these payments.”
Kulyk said the company is tied to one or more prominent Democrats, Ukrainian officials insist, as reported by The Hill.
To read more on this in-depth investigation go to The Hill…
via ZeroHedge News http://bit.ly/2KeagVI Tyler Durden
The White House has joined other international voices in urging Benghazi-based renegade General Khalifa Haftar tohalt his ongoing assault on the country’s capital — this as the United Nations-backed Government of National Accord (GNA) in Tripoli has already spent days battling Haftar’s Libyan National Army (LNA), which has included the use of air power.
Late in the day Sunday, Secretary of State Michael Pompeo said in a statement, “We have made clear that we oppose the military offensive by Khalifa Haftar’s forces and urge the immediate halt to these military operations against the Libyan capital.”
Gen Haftar’s forces in the southern town of Sebha last month, via AFP/BBC
And additionally Pompeo stated, “There is no military solution to the Libya conflict” — an absurd and ironic line for a top US official, given it was the US-NATO led 2011 war on Libya’s Gaddafi that plunged the country into years of internecine civil war and violence in the first place.
“A political solution is the only way to unify the country and provide a plan for security, stability and prosperity for all Libyans,” Pompeo said further.
Over the weekend US Africa Command said it was withdrawing a small contingency of Marines in Libya due to “security conditions on the ground.” US forces had reentered Libya in larger numbers during a 2016 campaign to oust ISIS terrorists from their stronghold in Sirte (notably Sirte had been Gaddafi’s favored town and the place of his execution at the hands of NATO-backed Islamists).
“The security realities on the ground in Libya are growing increasingly complex and unpredictable,” said AFRICOM commander Marine Corps Gen. Thomas Waldhauser, announcing the move. “Even with an adjustment of the force, we will continue to remain agile in support of existing U.S. strategy.”
The LNA has conducted air strikes on the south of the city as it seeks to advance into the center from a disused airport.
But the government of Prime Minister Fayez al-Serraj has armed groups arriving from nearby Misrata to help block the LNA.
It reported 11 deaths without saying on which side.
Al-Serraj, 59, who comes from a wealthy business family, has run the Tripoli government since 2016 as part of a U.N.-brokered deal boycotted by Haftar. — Reuters
Haftar – who solidified control of Eastern Syria and swept through the south in January, seeks to capture Tripoli and seize military control of the entire country, after his LNAcaptured a section aroundTripoli’s international airport.
As we noted earlier Sunday, some international reports confirmed that the LNA gained full control of the airport later in the day Saturday, but other conflicting reports say that this was premature, which could mean only a section what’s called the “old airport” was wrested from Tripoli forces — not the operational international side. Video purporting to be from the inside the Tripoli airport was posted on social media Saturday.
The U.N. Security Council fears that the Libyan National Army’s advances toward Tripoli –– where the U.N.-backed government is –– could lead to a military showdown.https://t.co/Htb5xrPhM9
The renegade general, who for about two decades previously lived in exile in the US a mere few miles from CIA headquarters in Virginia, is unlikely to halt the assault, which has the UN fearing a new major war that could further rip Libya apart.
#Libya– video of LNA fighting near Khallet Alforjan, Ain Zara, outskirts of #Tripoli.
Classic combined-arms tactics:
-Couple of dudes taking potshots with an MG in general direction of enemy
-Tank doing donuts
-Someone walking by with an RPG
-A guy on his back filming it all pic.twitter.com/USLo4i026e
One political commentator and historian, Gerald Horne, placed the latest events within the context of the prior NATO intervention: “You may well expect a bloodbath to unfold in Tripoli. Which is quite tragic and unfortunate, but I’d say it’s the inevitable outcome of the ill-advised attack by NATO, led by the US, that resulted in the 2011 overthrow of Gaddafi,” he told Russia’s RT.
As Libya descends even further into anarchy, violence & instability, here was the reaction of Hillary Clinton – a leading advocate of that “humanitarian bombing” – after learning Gaddafi was murdered (he was raped with a bayonet by a mob as he was killed). “Humanitarian wars”: pic.twitter.com/GFjPnaQKny
Based in Libya’s oil-rich east, Haftar’s militia has already captured much of the country’s oil resources, especially after a successful blitz to take much of the south over the past year.
And now he stands ready to take the capital of Tripoli in the west — home to Libya’s state-run National Oil Corporation, which when combined with small subsidiaries under its direction accounts for some 70% of the country’s oil output.
* * *
Bloomberg’s Salma El Wardany considers the potential impact on global oil markets and asks, will this impact oil exports?
Not immediately. Major oilfields and export terminals are
far from the clashes. But history shows that fighting anywhere
in Libya can cause dramatic swings in output. In June, Libya’s
crude shipments were suspended for weeks after Haftar captured
two export terminals and transferred them to an oil authority in
eastern Libya. Exports dropped by 800,000 barrels a day and
Libya lost almost $1 billion before he handed the terminals back
to the Tripoli-based National Oil Corp. “Oil operations have
been largely normal but any sustained fighting could quickly
bring Libya back below one million barrels a day,” Darwazah
said.
Concerning oil facilities in the west of the country:
Any disruption at Zawiya port, the main export terminal for
Sharara, would cause a partial or a complete shutdown of the
300,000 barrel-a-day oil field. Zawiya is scheduled to load 6
million barrels of crude in April. If Haftar takes control of
the terminal, he will virtually control Libya’s oil industry.
Prior the 2011 Libyan war and NATO military intervention which ultimately led to the overthrow and killing of longtime ruler Muammar Gaddafi, Libya produced about 1.6 million bpd, but years of turmoil and political instability in the aftermath have slashed that to 550,000 barrels per day as of 2018 output numbers.
via ZeroHedge News http://bit.ly/2OVx5fD Tyler Durden
An impossible job? Kirstjen Nielsen announced Sunday that on April 10, she’ll be stepping down as head of the Department of Homeland Security (DHS). Customs and Border Protection chief Kevin McAleenan will then become acting secretary of DHS.
Nielsen’s resignation comes less than a year and a half after she replaced John Kelly. Kelly went on to become President Donald Trump’s chief of staff, but he left that position in January. “With McAleenan’s appointment, Trump now has an acting homeland security secretary, defense secretary, interior secretary and chief of staff,” notesAxios.
Secretary of Homeland Security Kirstjen Nielsen will be leaving her position, and I would like to thank her for her service….
Nielsen “has arguably been the most aggressive secretary in the department’s short history in cracking down on immigration—with her legacy likely to be defined among progressives by the ‘zero tolerance’ prosecution policy of late spring and early summer 2018 that resulted in the separation of thousands of families at the US-Mexico border,” writes immigration reporter Dara Lind. Alas:
None of it appears to have been enough for Trump.
Nielsen’s resignation was preceded on Thursday night by the abrupt withdrawal of the nomination of acting Immigration and Customs Enforcement director Ron Vitiello to formally lead the agency, with Trump telling reporters Friday morning that he wanted to go in a “tougher direction.” While it’s not yet clear whether Trump requested Nielsen’s resignation or not, it certainly appears as if that “tougher direction” is extending to a new DHS secretary….
[W]ith nearly 100,000 migrants apprehended by Border Patrol agents along the US-Mexico border in March, Trump is yet again ruminating angrily and obsessively over immigration, riffing in speeches about telling migrants “we’re full” and “go back.”
Nielsen couldn’t make that happen, because no one could, because it’s impossible. The US can’t—even with a wall—physically prevent the entry of unauthorized immigrants onto US soil. And once on US soil, they have certain rights—including the right to request asylum.
The one silver lining here seems to be that there’s not much more McAleenan, or any Nielsen replacement, can legally do.
Even during Kelly’s tenure as DHS head, “the low-hanging fruit of deterrent immigration policies had been picked a long time ago,” writes Lind. She continues:
US immigration law is a balance between the desire to minimize unauthorized entry into the United States and the desire to protect vulnerable people who may be fleeing harm and persecution. Both US and international law prohibit the US from refusing entry to people who are in danger of prosecution in their home countries; both US statute and court settlements offer extra due-process protections to asylum seekers, children, and families.
The policies Trump wants, and the outcomes he has promised, aren’t within the power of the White House or the Department of Homeland Security.
As for Acting Secretary McAleenan’s prospects: He’s shown no particular signs of being better or worse than the average border hawk. He has presided over some of the worst immigration actions and abuses of the Trump administration, while refusing to endorse the very worse of Trump’s rhetoric. He’s “not an ideologue or fire breather,” an anonymous DHS officially tells CNN.
Kevin McAleenan is a career border officer. He “looks the part” better than Nielsen. But he’s not the dude who blames Ds for everything or talks of “invasion.” & he—like any other human on earth—can’t physically stop migrants from setting foot on US soil. https://t.co/YMKG55w4Pi
“The safest place in the world to be online.” A new internet regulation proposal backed by U.K. Prime Minister Theresa May would give regulatory bodies there “unprecedented powers to issue fines and other punishments if social-media sites don’t swiftly remove” offending content. British authorities are touting it as a way to ensure the U.K. is “the safest place in the world to be online.” Right now, the proposal “comes in the form of a white paper that eventually will yield new legislation,” reportsThe Washington Post:
Early details shared Sunday proposed that lawmakers set up a new, independent regulator tasked to ensure companies “take responsibility for the safety of their users.” That oversight—either through a new agency or part of an existing one—would be funded by tech companies, potentially through a new tax.
The agency’s mandate would be vast, from policing large social-media platforms such as Facebook to smaller web sites’ forums or comment sections. Much of its work would focus on content that could be harmful to children or pose a risk to national security. But regulators ultimately could play a role in scrutinizing a broader array of online harms, the U.K. said, including content “that may not be illegal but are nonetheless highly damaging to individuals or threaten our way of life in the U.K.” The document offers a litany of potential areas of concern, including hate speech, coercive behavior and underage exposure to illegal content such as dating apps that are meant for people over age 18.
FREE MINDS
Raunch-rhetoric realignment? These are words I never thought I’d type but…an interesting Matthew Yglesias thread:
Here’s a hypothesis I have without much hard data.
There’s been a decades-long debate in the US between Christian conservatives and feminists but also a third force in the debate that rarely articulates a self-conscious ideology — a sort of raunch culture.
“A pregnant mother is facing disorderly conduct charges in Georgia for allowing her 3-year-old son to relieve himself in public,” reports AP.
“When people ask me, how the Trump era is adjusting my political views, my answer is simple: It’s making me more libertarian,” writes David French at National Review. “It’s making me more concerned about the fate of the Constitution. I trust the government less, I’m more appalled at its sweeping assumptions of power, and I see more clearly what happens when its leaders—possessed with unwavering self-righteousness—believe that the ends justify the means.”
In China, a new app called Study the Great Nation pumps out Communist propaganda all day, directly to citizens’ smartphones, and awards them for reading. “Many employers now require workers to submit daily screenshots documenting how many points they have earned,” saysThe New York Times.
Last week, the Bureau of Labor Statistics (BLS) published the March monthly “employment report” which showed an increase in employment of 196,000 jobs. As Mike Shedlock noted on Friday:
“The change in total non-farm payroll employment for January was revised up from +311,000 to +312,000, and the change for February was revised up from +20,000 to +33,000. With these revisions, employment gains in January and February combined were 14,000 more than previously reported. After revisions, job gains have averaged 180,000 per month over the last 3 months.
Baseline Unemployment Rate: Unchanged at 3.8% – Household Survey
U-6 unemployment: Unchanged at 7.3% – Household Survey
Civilian Non-institutional Population: +145,000
Civilian Labor Force: -224,000 – Household Survey
Not in Labor Force: +369,000 – Household Survey
Participation Rate: -0.2 to 63.0– Household Survey”
There is little argument the streak of employment growth is quite phenomenal and comes amid hopes the economy will continue to avoid a recessionary contraction. When looking at the average rate of employment growth over the last 3-months, as Mike noted at 180,000, there is a clear slowing in the trend of employment. It is this “trend” we will examine more closely today.
While a tremendous amount of attention is focused on the monthly employment numbers, the series is one of the most highly manipulated, guesstimated, and annually revised series produced by any agency. The whole issue of seasonal adjustments, which try to account for temporary changes to employment due to a variety of impacts, is entirely too systematic to be taken at face value. The chart below shows the swings between the non-seasonally adjusted and seasonally adjusted data – anything this rhythmic should be questioned rather than taken at face value as “fact.”
As stated, while most economists focus at employment data from one month to the next for clues as to the strength of the economy, it is the “trend” of the data which is far more important to understand.
The chart below shows the peak annual rate of change for employment before the onset of a recession. The current annual rate of employment growth is 1.4% which is lower than any previous employment level prior to a recession in history.
But while this is a long-term view of the trend of employment in the U.S., what about right now? The chart below shows employment from 1999 to present.
While the recent employment report was slightly above expectations, the annual rate of growth is slowing. The chart above shows two things. The first is the trend of the household employment survey on an annualized basis. Secondly, while the seasonally-adjusted reported showed 196,000 jobs created, the actual household survey showed a loss of 200,000 jobs.
Many do not like the household survey for a variety of reasons but even if we use the 3-month average of seasonally-adjusted employment we see the same picture. (The 3-month average simply smooths out some of the volatility.)
But here is something else to consider.
While the BLS continually adjusts and fiddles with the data to mathematically adjust for seasonal variations,the purpose of the entire process is to smooth volatile monthly data into a more normalized trend. The problem, of course, with manipulating data through mathematical adjustments, revisions, and tweaks, is the risk of contamination of bias. A simpler method to use for smoothing volatile monthly data is using a 12-month moving average of the raw data as shown below.
Notice that near peaks of employment cycles the employment data deviates from the 12-month average but tends to reconnect as reality emerges. (Also, note the pickup in employment due to the slate of “natural disasters” in late 2017 which are now fading as reconstruction completes)
Sometimes, “simpler” gives us a better understanding of the data.
Importantly, there is one aspect to all the charts above which remains constant. No matter how you choose to look at the data, peaks in employment growth occur prior to economic contractions rather than an acceleration of growth.
However, there is more to this story.
A Function Of Population
One thing which is never discussed when reporting on employment is the “growth” of the working age population. Each month, new entrants into the population create “demand” through their additional consumption. Employment should increase to accommodate the increased demand from more participants in the economy. Either that or companies resort to automation, off-shoring, etc. to increase rates of production without increases in labor costs. The chart below shows the total increase in employment versus the growth of the working age population.
The missing “millions” shown in the chart above is one of the “great mysteries” about one of the longest economic booms in U.S. history. This is particularly a conundrum when the Federal Reserve talks about the economy nearing “full employment.” The Labor Force Participation Rate below shows this great mystery.
Since many conservatives continue to credit President Trump with a booming economy and employment gains, we can look at changes to the labor force participation rate by President as a measure of success. Currently, Trump’s gains are either less than Clinton, the same as Reagan, or tracking Bush Sr.; “spin it” as you will.
Of course, as we are all very aware, there are many people who are working part-time, going to school, etc. But even when we consider just those working “full-time” jobs, particularly when jobless claims are reaching record lows, the percentage of full-time employees is still well below levels of the last 35 years.
“With jobless claims at historic lows, and the unemployment rate at 4%, then why is full-time employment relative to the working-age population at just 50.27% which is down from 50.5% last month?”
It’s All The Baby Boomers Retiring
One of the arguments often given for the low labor force participation rate is that millions of “baby boomers” are leaving the workforce for retirement. This argument doesn’t carry much weight given that the “Millennial” generation, which is significantly larger, is simultaneously entering the workforce. The other problem is shown below, there are more individuals over the age of 55, as a percentage of that age group, in the workforce today than in the last 50-years.
Of course, the reason they aren’t retiring is that they can’t. After two massive bear markets, weak economic growth, questionable spending habits,and poor financial planning, more individuals over the age of 55 are still working because they simply can’t “afford” to retire.
However, for argument sake, let’s assume that every worker over the age of 55 retires. If the “retiring” argument is valid, then employment participation rates should soar once that group is removed. The chart below is full-time employment relative to the working-age population of 16-54.
Importantly, note in the first chart above the number of workers over the age of 55 increased last month. However, employment of 16-54 year olds declined from 50.78% to 50.55%. It is also, the lowest rate since 1985, which was the last time employment was increasing from such low levels.
The other argument is that Millennials are going to school longer than before so they aren’t working either.(We have an excuse for everything these days.) The chart below strips out those of college age (16-24) and those over the age of 55. Uhm…
Here is the same chart of employed 25-54 year olds as a percentage of just that group.
When refined down to this level, talk about data mining, we do actually see recovery, however, after the longest economic expansion on record, a record stock market, and record levels of corporate debt to fund expansions and buybacks; employment ratios for this group are at the same level as seen in 1988. Such should raise the question of just how robust the labor market actually is?
Low initial jobless claims coupled with the historically low unemployment rate are leading many economists to warn of tight labor markets and impending wage inflation. If there is no one to hire, employees have more negotiating leverage according to prevalent theory. While this seems reasonable on its face, further analysis into the employment data suggests these conclusions are not so straightforward.
Strong Labor Statistics
Michael Lebowitz recently pointed out some important considerations in this regard.
“The data certainly suggests that the job market is on fire. While we would like nothing more than to agree, there is other employment data which contradicts that premise.”
For example, if there are indeed very few workers in need of a job, then current workers should have pricing leverage over their employers. This does not seem to be the case as shown in the graph of personal income below.
Furthermore, a closer inspection of the BLS data reveals that, since 2008, 16 million people were reclassified as “leaving the workforce”. To put those 16 million people into context, from 1985 to 2008, a period almost three times longer than the post-crisis recovery, a similar number of people left the workforce.
Why are so many people struggling to find a job and terminating their search if, as we are repeatedly told, the labor market is so healthy? To explain the juxtaposition of the low jobless claims number and unemployment rate with the low participation rate and weak wage growth, a calculation of the participation rate adjusted unemployment rate is revealing.
When people stop looking for a job, they are still unemployed, but they are not included in the U-3 unemployment calculation. If we include those who quit looking for work in the data, the employment situation is quite different. The graph below compares the U-3 unemployment rate to one that assumes a constant participation rate from 2008 to today. Contrary to the U-3 unemployment rate of 3.90%, this metric implies an adjusted unemployment rate of 8.69%.
Importantly, this number is much more consistent with the data we have laid out above, supports the reasoning behind lower wage growth, and is further confirmed by the Hornstein-Kudlyak-Lange Employment Index.
(The Hornstein-Kudlyak-Lange Non-Employment Index including People Working Part-Time for Economic Reasons (NEI+PTER) is a weighted average of all non-employed people and people working part-time for economic reasons expressed as the share of the civilian non-institutionalized population 16 years and older. The weights take into account persistent differences in each group’s likelihood of transitioning back into employment. Because the NEI is more comprehensive and includes tailored weights of non-employed individuals, it arguably provides a more accurate reading of labor market conditions than the standard unemployment rate.)
One of the main factors driving the Federal Reserve to raise interest rates and reduce its balance sheet is the perceived low level of unemployment. Simultaneously, multiple comments from Fed officials suggest they are justifiably confused by some of the signals emanating from the jobs data. As we have argued in the past, the current monetary policy experiment has short-circuited the economy’s traditional traffic signals.None of these signals is more important than employment.
As Michael noted:
“Logic and evidence argue that, despite the self-congratulations of central bankers, good wage-paying jobs are not as plentiful as advertised and the embedded risks in the economy are higher. We must consider the effects that these sequences of policy error might have on the economy – one where growth remains anemic and jobs deceptively elusive.
Given that wages translate directly to personal consumption, a reliable interpretation of employment data has never been more important. Oddly enough, it appears as though that interpretation has never been more misleading. If we are correct that employment is weak, then future rate hikes and the planned reduction in the Fed’s balance sheet will begin to reveal this weakness soon.”
As an aside, it is worth noting that in November of 1969 jobless claims stood at 211,000, having risen slightly from the lows recorded earlier that year. Despite the low number of claims, a recession started a month later, and jobless claims would nearly double within six months. This episode serves as a reminder that every recession followed interim lows in jobless claims and the unemployment rate. We are confident that the dynamics leading to the next recession will not be any different.
But then again, maybe the yield-curve is already giving us the answer.
via ZeroHedge News http://bit.ly/2OUaWya Tyler Durden
This spring has seen a spike in families fleeing Central America and flocking to the U.S. border seeking asylum. Contrary to President Donald Trump’s claims, this isn’t a crisis. But the situation is straining the resources of frontline border agencies that are running out of space to process and house these migrants, partly because the president has been wasting resources on a useless wall rather than hiring judges and personnel for quick processsing.
An impossible job? Kirstjen Nielsen 
